School’s out for the summer nearly everywhere, and millions of college students are flocking to a variety of businesses, large and small, for those coveted summer internships. In times gone by, those internships were considered to be cheap or free temporary labor, designed simply to substitute the traditional workforce with low and non-paid workers. Training and career benefits for the individual were considered incidental by management. Over time, all this has changed—first in large corporations, and then gradually into smaller businesses. Now, all interns are under government scrutiny, no matter where employed or when—since interns are now employed all year round— everywhere.
And interns themselves have entered the legal arena. Recently there have been several high-profile cases where individuals, classified as interns, have brought claims alleging that they were improperly paid and the U.S. Department of Labor and plaintiff attorneys have been aggressively pursuing cases where employees are improperly treated as exempt interns.
In one important ruling, Fox Searchlight Pictures v. Glatt, the Southern District of New York ruled that unpaid interns working on the production of the movie “Black Swan” were in fact employees and should have received at least the minimum wage for their work. Other high-profile cases brought by, or on behalf of, interns involve such entities as Conde Nast Publications, Sirius XM Radio, Viacom and Warner Music Group.
If you are considering hiring unpaid interns and want to avoid lawsuits, managers and human resources executives should make sure of the following:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training, which would be given in an educational environment.
- The internship experience is for the benefit of the intern.
- The intern does not displace regular employees, but works under close supervision of existing staff.
- The employer who provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.
- The intern is not necessarily entitled to a job at the conclusion of the internship.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
The Department of Labor has issued an opinion to the effect that if not all of the above mentioned six criteria are met, then the intern must be paid at least the minimum wage and for any overtime work. While the agency’s opinion is not itself law, it is recommend that employers carefully consider whether they meet the criteria before classifying individuals as unpaid interns.
If you plan on employing paid interns, work carefully with your management team to ensure that the interns are being paid consistent with wage and hour laws— this includes interns who receive alternative compensation such as stipends, housing allotments, etc.
Philip Kemper is Founder/President of KemperAssociates, a 38-year-old Chicago-based national executive search firm. Contact Phil with questions or comments at kemperassociates.org or firstname.lastname@example.org.